A taxing problem

And why is this an issue , well I remind every one GORDON BROWN and ZANU_LIEBOUR has left the country bankrupt, pure and simples that fact should not be forgotten by anyone

Also they should sort out IR35 and Hit the really big avoider of taxes,
even if it means that they leave the country, then that is fine too.

The tax level are NOT are the level when the Rolling Stones left at 97%.

The super rich life the ones that donated to labour should be taxed until the pip sqweeks

Nick you say

"As a quick learner of this particular political game, Mr Cable says he's arguing for the policy pursued by Nigel Lawson and Mrs Thatcher ie equal rates for income and capital gains tax."

It looks like Vince may well be more than a match for the Conservative back benchers.

Also re winnng over the Mail voters "Saint Vince" has been a columnist on the Mail on Sunday for a number of months. Messrs Davis, Redwood et al may have to come to accept the new reality or be quickly put out to the peripheries.

By the way did anyone see how well David Laws batted aside Alistair Darling yesterday in Parliament?

Answer me this.
If you suffer with Ulcerative Colitis, cannot use public transport, therfore need your own transport, have been made redundant, are aged 60, have a private pension of £6k a year, have bought shares to try and make some money as interest on money invested is next to nothing. How do you get a job and how do you survive?

This comment has been referred for further consideration. Explain.

The Times is reporting panic selling of property and shares by the middle income people likely to be hit worst.

Obviously we are already heading for a double dip, as tens of thousands of people are put out of work by the spending cuts and millions more stop spending in case they are next.

Have lord snooty and bertie wooster set us up for a major crash with this latest fiasco?

You have to wonder what is going through the Conservative Back Benchers collective minds.
This is the start of a Government in which the Tories do not have an overall majority and are relying on the coalition agreement for majority power.
A split in the Conservative ranks now would not only damage the current Government but put doubts in the minds of the voters should their rebellious nature force an earlier than planned election.
Yes I agree with their stand on the 1922 committee but they would be best to keep their heads down and let David Cameron get on with his job for now

Time to compare and contrast.

Our state owned banks are still struggling, and of course we have the hangover of distressed assets from those institutions.

This is a legacy of the policies pursued by borrower Brown and his henchman, action avoider Darling.

In the states they are getting close to selling the stake in Citigroup that they took to rescue that giant. Not only has the bank written off over $100 bn of assets (why it needed the money) but has repaid $20 bn in loans, and the shares are at level where the government can look foward not only to getting its $25 bn investment back, but also show a $7-8 bn profit.

This is the target that Mr Cable now has to look at with regard to both RBS and Lloyds. He has to cope with the fact that the terms on which the state involvement took place were not similar to those in the US, whihc just goes to highlight the difference in approach, and which approach was correct.

The Tax Manual is far far too big and this benefits only the tax avoidance business. Brevity and simplicity is what is required.

All capital gains should be taxed - and I mean everything including all homes. There should be time based taper relief - explicit and simple accompanied by an annual allowance (10,000). Nothing more or less should be required. No exceptions no special relief for businesses at all. (including the special agricultural exemptions and the special treatment of venture capital.)

Do we need an annual wealth tax? My guess is that we do at some single figure low percent rate, with an exemption below 1 million perhaps, with taper relief up to 25 million.

Capital Gains and Wealth should be treated just like any other income. Those with money, be it income, capital gain or wealth must pay their fair share.

They can't JUST raise the CGT rates. It'll become a tax on inflation and will discourage investment. So they'll have to introduce something to counter this. Indexation allowance and taper relief have both previously been used.

Indexation allowance accounted for inflation, taper relief encouraged investment in businesses (although I thought the latter a bit too generous to be honest).

Mind you, it will make ISAs more useful.

In the new political age, clearly there are some who have yet to grow up, or accept that they need to die off.

10 Quite why there's this bl**dy obscession with taxing everything and anything that moves, Gawd only knows.

But it goes to the heart of Brown's style of Government. Instead of asking "what does the Government need to spend......and how do we go about getting that amount of money in tax?" the question became "how much tax can we squeeze out of people in various devious ways......and what will we then spend it on?".

7. At 12:26pm on 27 May 2010, jon112uk wrote:
Have lord snooty and bertie wooster set us up for a major crash with this latest fiasco?

----------

Change the record for goodness sake! If that's the best you can do, then don't bother, eh?

10. At 12:31pm on 27 May 2010, John_from_Hendon wrote:

All capital gains should be taxed - and I mean everything including all homes."

Absolutely absurd. You want to tax main domicile? So I buy for 300k and after 5 years my house goes up to 400k. I have a family at this point and want to buy a bigger property. You tax my 100k gain at 40%. Whoops - I can't afford to move up the housing ladder because the bigger property has gone up by a corresponding amoun in the same 5 year period.

Back to the drawing board

10. At 12:31pm on 27 May 2010, John_from_Hendon wrote:

Capital Gains and Wealth should be treated just like any other income. Those with money, be it income, capital gain or wealth must pay their fair share."

What is your definition of fair share? All of it? They've already been taxed before what is left is added to their wealth. And now you want to tax it again. Oh, and hold on - you'll tax it again the following year.

Here's an idea - drastically cut government spending instead.

Post 7 what complete and utter rubbish.

Middle income people (average income in the UK remember is approx GBP 20,000 a year) don't have masses of property or shares. It is just scare mongering put about by a few people with agendas.

I according to the ONS earn in the top 2.5% of UK earners and I could only dream about making more than GBP 10,000 a year in capital gains.

Lets have a little reality check here.

1) If you own one property alone you don't pay CGT on that if you sell it.
2) If you have loads of shares sitting around and don't use your annual CGT allowance to effectively "bed and breakfast" them by selling in one year to accrue the gain within your CGT and buy them back to start again well then to be blunt you deserve to pay tax.
3) If you own lots of property and are rushing to sell some of it then you certainly aren't any middle earner I know.

All the old jargon is being dragged out again, "fair share", and "haves and have nots". Somebody is even considering an annual wealth tax.

It seems fairness is described as taking away something from somebody who has it and giving it somebody who hasn't. All well and good, as far as it goes. Eventually the people who didn't have it to begin with will end up with it all.

If the people who originally didn't have it, for whatever reason, and got it through re-distrubtion, so they now have it but have failed to hold on to it, for whatever reason, when the original "haves" have had everything taken away, in the interests of fairness, become the new have nots, who's going to give to them?

Complicated, eh? But that's the problem with socialist principles, however well meaning. There is a reason for the parable about the talents.

Prudent people who can, do put aside some money for the inevitable rainy day. Then some well meaning busy body decides that that money could be better used by giving it to somebody today, hence the annual wealth tax idea. Not only does that disincentivise anybody from being prudent, forcing reliance on the state for everything, but it also smacks of unfairness, since people who are profligate don't get punished for their sin.

I thought we had voted out the socialist money grabbing politicians? Why don't they just accept that things have changed. After all, there's no money left!

"This coalition looks set to be, as one of my illustrious predecessors once put it, "good for trade" - if, of course, your trade is political journalism."

Hmm.


So when does Laura get the job then?

https://order-order.com/2010/05/26/the-post-robinson-age/

I agree wholeheartedly with Vince Cable'approach - peg CGT and Income Tax at the same level - 20% [and that's the top rate]

Why is no one shouting from the house tops that the global economic crisis was caused by the Tories friends - THE BANKERS - not any one country's government and certainly not the Labour government.

It is no wonder that the Tories cannot agree on anything that shouts of fairness to ordinary folks - they are simply not used to it. Tory government is a euphemism for helping the rich at the expense of the poor.

Wearing the sheep's clothing of Lib Dem decency does not hide the Tory wolf beneath!

I agree with #11, this would equate to a tax on inflation if no relief is given for length of time held.

However we are in such a mess the only way out of it is it higher taxes for everyone with a lot fewer public services and the sooner joe public accepts this the better.

I will support any increase in tax if the government cuts say £3 for every £1 it gains in extra tax

7. At 12:26pm on 27 May 2010, jon112uk wrote:
The Times is reporting panic selling of property and shares by the middle income people likely to be hit worst.

Good more cheap property and below cost shares coming on the market then. Thamks for the Tip!

This talk of revisions to Capital Gains Tax is rather muddling.

First, it's all about capital GAIN. So, if the precarious state of the European economies and the various markets (including property) result in a property being sold at no actual gain, or at a loss - then no tax liability. Oh and we're talking about 40% of the gain, not 40% of the value of the property.

Secondly, surely most 'second homes' are actually being rented out to tenants (i.e. the owner is in the business of being a landlord) or are out on the 'holiday lets' (i.e. the owner is in the business of being a different type of landlord).

If they're standing around empty, just waiting for the property price to go up, then that can't be good for anyone really. I mean not with the huge amount of homelessness we have in the UK.

If they're out on some sort of let, then these changes shouldn't make any great difference to people, except if people keep swapping between first and second homes to reduce their CGT liability.

The problem with the new coalition's position is that not only have they inherited the problems of a bankrupt public purse but they have no new solutions to economic challenges. They still seek to apply old style 'tax & spend' solutions to an economy driven by capitalist principles of quantitative economics rather than to shift the emphasis to qualitative economics.

Small government demands a smaller tax burden and a jump-start of the private sector and economic growth. It is not going to be achieved through consumerism because the very people expected to deliver it are being taxed into oblivion. The default expectation is now a joint income, when it should be based on the single person's affordability. The reality is that taxation has reached saturation point and a new direction is required. For instance, instead of apply redundancies to Public sector staff, why not offer them an equivalent incentive to start up a business or 'contract-out' a public service to improve efficiency and cost effectiveness? Why not impose a redundancy tax on businesses to persuade more employers to manage their way out of a crisis by being creative and focusing on redeployment rather than unemployment? People need to be more innovative in solving these issues.

Taxation is not the answer to everything and excessive taxation of the productive element of society will only stifle growth. What is needed is a rapid shift to private sector emphasis. Cameron's own vision, direction and policy agenda is flawed and through compromise he is learning that the 'Cameron way' is not necessarily the best way. He cannot afford to ring-fence and protect certain inefficient sectors of the budget and place the emphasis on tax raising strategies. There will be more pain to come when we get down to the question of serious and meaningful cuts and to facing serious opposition to tax increases.

Small government requires, nay demands, smaller tax burdens and budgets and only having what we as a nation can afford, when we can afford it. It is no different or more complex than the dining room economics of the average family. So far LibCon have not resisted the temptation to spend some of the money they are trying to save on other things because they want to be seen to be doing positive things and not just negative ones. If they want to see where that leads, they need look no further than 13 years of Labour for the acceleration of uncontrolled spending. Increasingly people are asking why we are putting so much money into Europe when we get very little back for our investment however much the Pro-EU lobby tell you otherwise. Investment must be targeted and it must be inward investment in the UK if we are to build our commercial strength back up. Protecting jobs must be at the forefront of any government strategy for recovery.

How many MP's currently feel they have an identity crisis and feel like taxis

5#

be an MP?

This comment was removed because the moderators found it broke the house rules. Explain.

re #4
For their record on fiscal probity and competence I would not choose Thatcher & Lawson as a team.

In fact, unknown, untried Cameron, Clegg, Osborne & Law (bit of a 'Firm' there?) start to present quite an appealing alternative when set against them.

It's nice and tidy to have capital gains taxed at the same rate as income but if that causes problems in balancing our fiscal set-up why bother? We live in the age of computers and online tax filing with auto-calculation so multiple bands and rates should not be a problem.

There is a mix of protest that comes from press and people with agendas plus those who are perhaps less well remunerated and have made sacrifices to save for the future and/or to help children. There are ways around that. Can't be beyond the wit of Chancellor and HMR&C to have CGT payable only on property 'portfolios' ie after residence and holiday home are exempt. Although some would argue that the acquisition of holiday homes by the affluent have caused big problems for others who live in those locations, and so some tax penalty should be applied.

Not sure I agree with that. Better to build a lot more homes, period. And make some new and better efforts to reinvigorate communities and their economies that are not (with one exception) based in London and the south-east of England.

This comment was removed because the moderators found it broke the house rules. Explain.

"All capital gains should be taxed - and I mean everything including all homes"

That's a bad idea - it would mean being taxed on inflation. If you buy a house for 200k and sell it for 400k, you wouldn't be able to buy another 400k house in another town as you'd lose money to CGT.

Second homes is a different matter though - they are an investment, not a basic need of life. CGT on second homes discourages people buying them, which would help being house prices back to more sensible levels for average families to afford.

The problem with capital gains for the non-wealthy is that you are not using your allowance every year and may well get hit when your 20 year investment is cashed in at say retirement.

If you could somehow give a taper relief it would make more sense, if you owned it 10 years then perhaps you should be able to even out the last 10 years of cgt allowance.

I declare no interest...since i cant afford to buy a second home or anything else that would get me this relief!

14. At 12:50pm on 27 May 2010, Ian__Taylor wrote:
7. At 12:26pm on 27 May 2010, jon112uk wrote:
Have lord snooty and bertie wooster set us up for a major crash with this latest fiasco?
----------
Change the record for goodness sake! If that's the best you can do, then don't bother, eh?
===========================================

I'll change my record when this failing conspiracy government changes the quality of it's policies.

There were a lot of people waiting for things to improve if we could get rid of Brown & co. - this lot is no improvement.

3 million unemployed before Christmas? Or would you disagree?

25. At 1:27pm on 27 May 2010, Paul wrote:

Why not impose a redundancy tax on businesses to persuade more employers to manage their way out of a crisis by being creative and focusing on redeployment rather than unemployment?"

Because that will lead to (a) businesses being much more wary of recruiting people than they already are (it's already incredibly hard and expensive to make people redundant), and (b) businesses closing down losing all jobs (without redundancy pay) rather than keeping going with just a few job losses.

10. At 12:31pm on 27 May 2010, John_from_Hendon wrote:

"Those with money, be it income, capital gain or wealth must pay their fair share."

Err no, not really.

Taxing income is one thing. Income is 'renewable' - in the main, next week, next month or whatever, along comes the next wage slip.

'Wealth' might not be renewable. So if you have a fixed amount of capital, say a property, and you are taxed on it annually then it will basically be taxed into non-existance. So you would either have to dispose of it in one way or another to pay the tax liability, or take extra money from your Income (if you had spare) to pay the tax.

THAT is the point of CGT. It taxes only the GAIN in Capital, so if your Capital shrinks, there is no liability for it.

Equally you are not taxed for having money, you are taxed for earning more money, i.e. Income, be that wages, interest accrued on money deposited, or whatever.

And those differences are very very important.

33#

And you were dumb enough to think it would happen overnight?

As a head of a small company I work at significant personal financial risk and as compensation I have equity in my company. I now find that I will loose considerable return if I through hard work manage to create a profitable company. I am therefore astonished and angry about this increase in CGT. It will be a very bad move for entrepreneurs and investors in high risk businesses. Why should we do it? There are easier ways of earning a living. By the way my company employs 30 people and is typical in providing good jobs for employees.

13. At 12:49pm on 27 May 2010, AndyC555 wrote:

But it goes to the heart of Brown's style of Government. Instead of asking "what does the Government need to spend......and how do we go about getting that amount of money in tax?" the question became "how much tax can we squeeze out of people in various devious ways......and what will we then spend it on?".

I thought Brown had left the building. This time it's about paying back the State. It's us the people that were jointly responsible for getting us into this mess and it's us the poeple that will have to pay up.
The reality is to cope with the debt it's going to be a mixture of cuts and tax rises.

Time to wake up smell the coffee and get those wallets out.

I agree with a wealth tax - say 1% per annum or less, covering houses, cars, shares, bank accounts, etc. at home and offshore. In some cases valued on a daily basis. Savings interest rates should be higher than the tax rate by law. Get rid of CGT and IHT.

If you've got wealth and you're using it to generate wealth, you're getting wealthier. If you have wealth tied up in expensive houses, art and toys, you'd better have the income to pay the taxes.

"well I remind every one GORDON BROWN and ZANU_LIEBOUR has left the country bankrupt, pure and simples that fact should not be forgotten by anyone"

Except that's not a fact at all - the fact is even Greece isn't bankrupt (yet), so saying such things is kinda absurd at best and a pure lie at worst.

Like when the media made such a big fuss about "no money left gate", yeah thanks we knew this - the clue was we had a deficit?

But the really terrifying thing about this whole affair is the fact the guy who is tasked with sorting all this out is also the same guy who doesn't know the difference between a deficit and a debt.

Apparently Osbourne wants to use the bank tax to "pay down the deficit". You reduce deficits and pay down debts.

Not totally surprising that the debt is also the key number in all of this; the deficit is a short term borderline irrelevence, the debt is the key number - it's not like anybody was planning to keep the deficit so high indefinately. And surprise surprise our debt is relitively low (per capita and as a perc of GDP - indeed as an overall figure).

Most of the responses show that the "usual suspects" haven't the foggiest about CGT, but that doesn't stop them contributing. (Ian at post 17 is an exception). Even JFH, who should know better.

CGT isn't an issue for most shareholders. With the annual exemption allowance and accessibility of ISAs (or PEPs for those that still have them), they'd be looking at pretty substantial gains if they are ever likely to be hit for CGT - and rather lucky to be in that position in current market conditions.

Owners of second homes face punitive rates, certainly if they bought well before the recent falls in property prices and they are forced to sell. If not, then just sit it out until the next bus comes along.

CGT has always been linked, rightly, to inflation. The suggestion that taper relief is reinstated is worthwhile, but please not the over-generous steps proposed by Redwood et al. and please, please, please not a return to the over-complex identification and matching rules introduced by the Chancellor of the Great Clunking Fist. Why not a return to the "good old days" of indexation? (Again, part of the reason for the aforementioned CGT reforms was to allow Governments to tinker with RPI/CPI bases).

The backdrop to this debate is that Vince Cable is showing himself up whenever he utters the word "fairness" - so reminiscent of administrations past. Now that he has a proper job to do, the Sage of Twickenham is fast becoming the Onion of Teddington.

Presumably if the government wants to tax capital gains as income, they'll be happy to write-off capital losses against income too? Thought not.

The more extreme speculative share dealing is by spread betting which is free of stamp duty and all capital gains tax. So short term speculators / traders pay nothing, and genuine investors get taxed between 20-50%.

If Con-Dems want to introduce change, make it from 2011/12 so investors can review their investments and change as necessary under the tax rules they thought would apply.

re #37
I confess to being a bit of date on some aspects of taxation but I recall that there are CGT reliefs for business. Do correct me if I'm wrong. If not, then you can sleep a little easier tonight.

As much as any of us can with the debt+deficit of Damocles hanging over our heads.

I think one thing is clear from reading the responses to this sort of post is that people have no idea about what tax is paid by anyone on anything.

Bed and breakfasting? Blocked, dear. Because that's considered unacceptable tax avoidance. Transfers to spouse? Tax planning that's similarly blocked, apart from the times when it isn't. IR 35? Well there was some mileage in blocking people using companies to receive employment income, but the legislation is too wide and stiffs the poor souls who are obliged to use such structure by their employers.

The tax system isn't leaking money to any great extent.

Re my Post 4 it appears that the Mail quite liked David Laws performance as well.

https://www.dailymail.co.uk/news/article-1281637/David-Laws-soon-Tories-roaring.html

Messrs Laws and Cable seem to be playing the Daily Mail like a violin whilst apparently, according to Private Eye, Rupert Murdoch has already been to see Dave at No. 10.

Post 29 re Thatcher and Lawson those were Nick's words not mine hence the speech marks. It doesn't matter what you or I think it the Daily Mail reader they are going for.

'For years supporters of strong majority governments warned that hung Parliaments would lead to deals done in "smoke-filled rooms" away from the public gaze.'
I have just one thing to say to that: Petermandelson.

Question: Will this push house prices up or down?

Initially I thought they'd go down as less people would want to buy second homes as an investment, but what if it just means that people won't sell until prices reach a level where they can recoup the increased tax?

I would agree to an increase in CGT rates accompanied by inflation indexation.

The effects on taxpayer behaviour also have to be considered. I had been considering selling my flat in France to purchase a bigger flat in London, to replace the very small place I currently occupy here. That is now out of the question and I have now booked a week's holiday in France during August to buy some new furniture and generally spruce up the place for much longer than anticipated occupation...

Taxing money that has already been taxed. Because the tax system is unfair and that those with wealth and accountants can avoid some proportional share the middle class always bares the burden. Corporations are given less taxes because they create jobs or may move elsewhere, which has nothing to do with taxes but more with cheap labor.
Because the tax system has been built on subterfuge it reflects the state of corruption that governments have become.

39. At 1:46pm on 27 May 2010, CP wrote:
I agree with a wealth tax - say 1% per annum or less, covering houses, cars, shares, bank accounts, etc. at home and offshore. In some cases valued on a daily basis."

This idea is so stupid it's barely worth even commenting on. If you levy this tax every year is will eventually mean that all assets end up with the State and all citizens' belongings will tend to zero. Whats the point in saving? Might as well just spend everything you earn.

39. At 1:46pm on 27 May 2010, CP wrote:
I agree with a wealth tax - say 1% per annum or less, covering houses, cars, shares, bank accounts, etc. at home and offshore. In some cases valued on a daily basis. Savings interest rates should be higher than the tax rate by law. Get rid of CGT and IHT.

If you've got wealth and you're using it to generate wealth, you're getting wealthier. If you have wealth tied up in expensive houses, art and toys, you'd better have the income to pay the taxes.

============================================================

So you're saying that Pensioners should be forced to sell their houses to pay tax on the value of them. Its the most stupid idea I've seen for a while.

Some people really don't think things through at all do they.

Nick

I don't think the debate over CGT is a particularly new or unusual phenomenon: it seems that backbenchers always try to test the resolve of their new Government in its early days and to establish who is in the driving seat.

I recall when the Labour Government swept to power in 1997, with a massive landslide, one of the first things that happened was a significant revolt by Labour backbenchers over changes to Lone Parent benefits.

This Parliament is more interesting because, with coalition Government, these debates will take place more in public, not behind the closed doors of a single party; and because there will be a more diverse range of views contributing to the resolution.

I think this will be good for all of us, not just for political journalists!

SmilingEdBalls wrote:
10. At 12:31pm on 27 May 2010, John_from_Hendon wrote:

All capital gains should be taxed - and I mean everything including all homes."

Absolutely absurd. You want to tax main domicile? So I buy for 300k and after 5 years my house goes up to 400k. I have a family at this point and want to buy a bigger property. You tax my 100k gain at 40%. Whoops - I can't afford to move up the housing ladder because the bigger property has gone up by a corresponding amoun in the same 5 year period.

Back to the drawing board

No I don't think so...if, as John_from_Hendon suggests all capital gains are taxed.. in the situation as described this will surely result in reduced demand and hence reduced house price inflation... and then maybe we can do away with stamp duty which unfairly penalises first time buyers?

Not totally surprising that the debt is also the key number in all of this; the deficit is a short term borderline irrelevence, the debt is the key number - it's not like anybody was planning to keep the deficit so high indefinately."

The deficit is an irrelevance? Really? Brown borrowed even in the good times. When did he plan to reduce this defecit to zero if not in those good years. Oh that's right. He didn't - buy my votes and the payback is someone elses problem.

Unfortunately, given the scale of the Grand National (Debt), this coalition looks set to be "Got No Legs" (running in the 3.30 at Haydock).

Really liked...and agreed with the 'reality check' in post 17!

41 - "CGT isn't an issue for most shareholders."

Except that they're talking of reducing the annual allowance to £2,000 and since you can only put shares listed on a recognised stock exchange into an ISA it leaves a whole raft of investors out there who could be hit by the changes (anyone investing in AIM listed companies for example)

And the most important investors of all (those often risking everything by investing in their own companies) certainly aren't doing it to make small amounts of money, so again, they could be badly hit by a rise in rates. Depends what theri plans are for ER, I suppose.

"CGT has always been linked, rightly, to inflation."

CGT (for individuals) hasn't been linked to inflation since 1998.

How about extending your unused capital gains relief to following years if it is not used this year?

This would get rid of the need to "bed & breakfast" your shares and would allow a modest gain on a property without being taxed?

100k gain on a property on selling a property that you've had for 10 years with no other use of the annual 10k per year allowance would = no CGT due. Simples

I applaud all those MPs who stand up for what they believe.

The voters elect MPs not PMs - never has this been truer than under this government.

A true democracy is where all MPs can speak freely, not 'keep their heads down' like lambs.

MPs were elected on their commitments to implement policy, not on their ability to cling on to power. Labour lost for appearing to cling on to power and not addressing the issues. This coalition will suffer the same fate unless backbenchers from both parties speak their minds!

Given that the vast majority of the Governments tax income arrives via the officially named 'extractive' taxes, namely Income Tax and National Insurance, then you would have a right to demand that the governing party(s) would be 'tax-efficient'.

But, according to William Rees-Mogg in a recent MoS article, the Tories are not.

And if the Tories are not tax efficient, then we can safely assume that the Lib-dems are'nt either.

As for Labour (new or otherwise), forget it.

It would seem that the hapless taxpayer has nowhere to turn, mainstream politically speaking, and he/she must therefore remain a mulch-cow for the Government of the day.

The rich should pay more captial gains tax. Why not, they can afford it after all? But they wont, they wont part with a brass farthing unless they have too. It would seem that the richer you are the more loath you are to pay your fair share. However, if history or the system tells you anything is that the rich will get their way in the end. What they want is more for thermselves less for you- more for them, less for you. Furthermore they want it all, not content with the near economic apocalypse they either a: caused or
b: benefitted from
they now want your nest egg, your pension, your house, your savings and they'll get it, they'll find a way because they pay millions to lobby and the politicians will give them what they want. They wont bite the hand that feeds them.

A lot of this actually hot air. Quel surprise on this blog, but there are a lot of tax rules which would need to change if the anticipated rate changes actually affected many people. I have only heard talk of rates changing, and that entrepreneurs will be in some way shielded. I have heard no talk at all of removing the various reliefs available to "capital gainers". The taxes are only payable when the gain (or loss ) has been realised (ie turned into cash) and then, in most cases, only if the capital and profits are not re-invested in a similar class of asset. In other words, if you have some shares which you sell for a profit, providing you re-invest the entire proceeds in yet more shares then there is no tax to pay. What most people potentially affected by this need to do is actually get a bit of advice from an accountant in respect of their investments and there will be no tax liabililty arising. If you have no income arising from such assets, then why are you selling? There are also specific rules about second homes for instance, which can be followed easily to ensure they fall in to a class which will gain relief. As I say, if you're lucky enough to have such assets consult someone with specific knowledge. Googling "capital gains tax relief" won't cut it by the way...
The other thing of course is that some of these potential additional taxes are in order to pay for the increase in personal allowances, which most taxpayers will benefit from. The good lord giveth and the lord taketh away. At least we haven't got the lord takething and the lord takething a bit more as well, and for that we can surely give praise.

Whom to anger and whom to delight, not whom. If senior BBC journalists can't write correct English, what chance the general public?

The US seems to have a simpler system here, where all personal income, from any source, is taxed as part of a single regime. No dividing it into capital gains and income tax, it's all the same. Of course, this is closer to what Cable is proposing, and people would lose the CGT exemption and any concept of taper relief. However, this is where the US system gets complicated again, with all the different deductions that can be claimed from the tax bill.

However, as a one-off, perhaps they could consider drawing a line in the sand so that asset value gain before that date are taxed under the current rules and asset value gain after that date would be taxed under the new rules. That would reduce the impact on people who'd made long-term investments on the basis of the rules. Otherwise, the well-connected might just arrange with their friends to buy each others' assets at a price and then sell them back the following day at the same price and achieve the same effect of separating out the before and after tax rates.

I have no sympathy for those complaining about CGT increases.
As things stand, we all get waived tax on our pension contributions, & can invest up to £7,200 per year in tax-free ISA's (more if you're over 50). Our partners likewise. So if you can afford to pay up your pension every year AND have more than £7,200 per year to invest, well, yes, when you come to sell up these shares or properties, you will have to pay more tax.

And that applies to...who exactly? I can think of precisely one person, and he is a banker.

Why the fuss?

It's only been, what one or two years, since the CGT rate was one's marginal rate - it was ridiculous to reduce the CGT rate to a blanket 18% with a top income tax rate of 40%, never mind the current 50%, as it actively promotes people organising their financial affairs (which they are entitled to do) towards capital or even capitalising income.

And that point has been signally absent from the discussions I've seen...

Poor reporting and poor memories, not what I expect from the BBC nor anyone opposing the change.

Why is no one shouting from the house tops that the global economic crisis was caused by the Tories friends - THE BANKERS - not any one country's government and certainly not the Labour government.
--------------------------------------------------------------------------

nothing to do with labour providing the banks free reign with zero regulation then. It is the labour governments fault, they failed to govern the country...

-self cert mortgages with only one in every 200 checked
-borrowing 5 times your salary with no deposit...
-selling gold reserves
-killing pension companies
-etc

51. At 2:01pm on 27 May 2010, sweetAnybody wrote:

"So you're saying that Pensioners should be forced to sell their houses to pay tax on the value of them. Its the most stupid idea I've seen for a while."

I'm unclear why you think Pensioners will be forced to sell their houses by this issue. Capital Gains is not liable on 'homes', i.e. houses in which people normally live (for a number of years). It IS applicable on such things as "second homes" - but the Government seems to be saying the changes will not apply where these properties are part of a business.

If you are letting out your second home to either permanent tenants or short-term tenants, then you are running a business and should be declaring the Income from that business to Inland Revenue anyhow.

As far as I can see it will only make a difference if the 'extra' property is left empty, or perhaps occupied by family members rent-free, or if the owners have avoided tax by not declaring they are receiving an income from tenants in the property.

On the subject of tax 'fairness' in general I would like to point out the following (ignore the personal allowance for the moment): someone on £20 000 a year pays tax of £4000 at the basic 20% rate. Someone on £100 000 would pay £20 000 a year at the basic rate - that's £16 000 more than the person on £20 000. THAT'S fair.

What isn't fair is that someone on £100 000 pays DOUBLE the basic rate on everything above a certain limit AND loses his/her personal allowance. It's not a 'fair share' at all. It takes a lot more time and effort to achieve an income of £100 000 than to earn £20 000 and those who succeed in this way should be allowed to keep a 'fair share' of the fruits of their labour, not be used as milk-cows to subsidise the state.

Let's have another election and remove the Lib-Dem tail that is wagging the Conservative dog.

This comment has been referred for further consideration. Explain.

For those of you demanding a pound of flesh via a Capital Gains Tax should put it in the context of fairness.

If you buy something and it goes up in value then you should be taxed at some level on the gain.

That's the basic premise of the tax as it is currently applied.

In the interest of fairness, if you buy something and it goes down in value, then you should be given a refund at the same pro-rata level as the tax. After all, what's sauce for the goose.....

The tax itself is open to abuse. Previously, when taper relief was allowed, the longer you held on to the asset the less tax you paid. the was equable, because it acknowledged the inflationary content, and also ensured the benefits to society coming from stable ownership. Obviously, skilled accountants can ensure maximum benefit to the taxee of taper relief, but that's only fair and reasonable.

It was borrower Brown who, needing money, as always, who changed the rules 3 years ago to make it a flat rate tax, at a higher level, and to disallow taper relief, all in the interests of fairness, he claimed. Funny how fairness can be open to so many interpretations.

So now we have a tax applied at a flat rate, with no benefits to how long the asset has been owned, and which applies to inflationary elements in a price, and which the supporters of ever higher levels of punitive taxes want to increase.

Why not just burn everything to the ground, in fairness?

@57 AndyC555

"CGT (for individuals) hasn't been linked to inflation since 1998."

True, in trying to keep my comments brief I removed the qualifier "closely or loosely".

Taper relief provided a loose link to inflation while allowing RPI/CPI bases to be interfered with. Corporation Tax arising on chargeable gains for companies remains linked to inflation indices.

Who are the middle classes and who are the working classes?

And where if not from them and the mass of property wealth they have accumulated is the money going to come from to cut this massive debt?

The money can't come from the working classes for they have already been milked with the abolition of the 10p tax band and a freeze on tax allowances.

So no-one wnats to pay more capital gains tax. Understood. But if they don't pay then surely it will be the middle classes who lose their public sector jobs instead when extra cuts have to be made.

It is a better tax that is only paid when you've already made the money than one which taxes you as you are making it.

No-one is protecting my savings interest. So who thinks their stocks and shares and buy-to lets should be protected?. It's tax or IMF. I know which one I'd choose.

Can we stop saying it is taxing money that has already been taxed.

It isn't.

It is only the 'gain' which is taxed in CGT, not the original capital.

The 'gain' by definition is new money.

I can't see what is unfair about bringing it into line with income tax, especially when you consider income tax is 'usually' earned by doing some work, whereas capital gain is often acrued by doing sod-all!

54 SmilingEdBalls wrote:

"The deficit is an irrelevance? Really? Brown borrowed even in the good times. When did he plan to reduce this defecit to zero if not in those good years. Oh that's right. He didn't - buy my votes and the payback is someone elses problem."

Wrong! I suggest that you check your facts first, at:

https://www.economicshelp.org/blog/uk-economy/uk-national-debt/

If you look at the graph on the right you will see that debt as a percentage of GDP fell from when Labour got elected in 1997 each year until 2002. If you take the level they inherited in 1997 it stays below this percentage of GDP up until 2008/2009 ie the start of the current financial crisis. It cannot be disputed that for the first 5 years of their term in office they were paying down the deficit.

Apologies if the facts get in the way of your rants.

This whole CGT issue has really cheesed me off. Both the Tories and the LibDems are just not thinking clearly and knee jerking into policy.

1. We have a £10000 per year Capital Gains Allowance
2. We can stick £4000+ into a tax free Cash ISA annually OR
3. we can alternatively stick £8000 into a tax free Stocks and Shares ISA annually

Those people who decided to invest in property have speculated knowing full well that CGT rates like every other tax rate is not forever and subject to change. At no point did they enter into this asset purchase with a gaurantee that the CGT is fixed at some silly low rate.

If you want to save for retirement, use the bloody ISA vehicles at your disposal.

Even today, the stockmarket ahs outperformed the property market over the long term.

I plan to invest in stocks and shares ISA's annually for 25 years and stay clear away from second home speculation.

Second home owners have no entitlement to be treated differently, its a capital gain, its speculation and its casued rampant house price inflation to the extent to price even middel to high earning first time buyers out of the market. Its also led to rampant rental price inflation too. No good ahs come of it and so these armchair spivs ened to be penalized.

53 PhilB

Only profit made on the sale of the house should be taxable. Capital from the sale of one hone and invested in the purchase of another would not be taxable and after personal CGT allowance would probably not incur any taxable profit at all unless you chose to keep the profit in cash.

The full CGT would therefore only apply to the sale of the final house by which time it would be paying for your care or other costs.

A relatively easy way to fund care in old age rather than the enforced sale of that persons home.

As they say, 'death and taxes'

So are we going to get this whining everytime an initiative designed to cut the deficit is rolled out.

UK Plc has a HUGE deficit. This needs to be reduced. End of.

That will be done via cutting costs or raising taxes. All the current lot are going to do is pick their methods and take the flack.

The rest of the discussions are somewhat moot.

And I agree with the point made: please can no-one forget that the people running the country for the past 13 (thirteen) years must shoulder some considerable blame here. Labour lived beyond our means,and bribed the electorate.

As they also say 'Payback is a .....'

in response to: At 12:23pm on 27 May 2010, telecasterdave wrote:

I would say you are being financially irresponsible to take spare cash you have and invest it in equities at the age of 60.
Given that you have posted this as a comment to proposed CGT changes I assume you are 'expecting' to maks short-term capital gains rather than accrue dividends.

Do you honestly believe that risking the whole notional value of your investment to gamble that your return will significantly reward you for the risk you are taking makes sense???

Before you criticize the taxation policy I would suggest you review your investment strategy.

We shouldn't tax capital gains.

The investor in capital assets takes the risk of them going up or down, it is not a tax on earnings it is a tax on price fluctuation.

There does however have to be a tax on income which is hidden as capital gains. To do this we can ban all capital gifts to employees by employers and change their status to income. This way the tax can't be avoided by the really wealthy employees.

There should also be no stamp duty as this increases the cost of investing into the UK and makes the capital costly to dispose of which discourages investment into the UK as investors like to easily and cheaply move around capital, they don't want to feel that their money is trapped.

So how to close the deficit

Income Tax
Tax free £0-11,000
Flat rate £11,000+ 22%

VAT
19% all goods and services

Land tax
Around 4% of the value of land (the value due to surrounding services not the value added by investment onto land i.e. property
Set to tax land at a varying share of land value to collect £80bn (Land values at around £2trn currently)

No: NI, capital gains tax, stamp duty, council tax, business rates, inheritance tax

Cut 16% overall through each government department except science.
2010 2%
2011 5%
2012 9%
2013 13%
2014 16%

There's one option

Budget cutting options:

First off

We shouldn't tax capital gains.

The investor in capital assets takes the risk of them going up or down, it is not a tax on earnings it is a tax on price fluctuation.

There does however have to be a tax on income which is hidden as capital gains. To do this we can ban all capital gifts to employees by employers and change their status to income. This way the tax can't be avoided by the really wealthy employees.

There should also be no stamp duty as this increases the cost of investing into the UK and makes the capital costly to dispose of which discourages investment into the UK as investors like to easily and cheaply move around capital, they don't want to feel that their money is trapped.

So how to close the deficit

Income Tax
Tax free £0-11,000
Flat rate £11,000+ 22%

VAT
19% all goods and services

Land tax
Around 4% of the value of land (the value due to surrounding services not the value added by investment onto land i.e. property
Set to tax land at a varying share of land value to collect £80bn (Land values at around £2trn currently)

No: NI, capital gains tax, stamp duty, council tax, business rates, inheritance tax

Cut 16% overall through each government department except science.
2010 2%
2011 5%
2012 9%
2013 13%
2014 16%

There's one option

I have never understood why CGT was lower than income tax -it is probably one of the only Tax policies that I thought the blessed Margaret got right. Capital Gains is income just like everything else and should be taxed the same in my view. I think Labour's position on this was wrong.
What is interesting about this row is that it is not a difference between the coalition parties front benches but solely in the Conservative party. They still haven't bought into the fairness agenda. The irony will be if Labour vote with them to defeat the Government on this issue.
I thought the PM in his speech on the Queens speech was more like a leader of the opposition in the language he used to be honest. Although I guess it will take time for him to adjust. I think he's finding, as PM's always do, that the job is a tough one.

Apply CGT to all residential property. This would put a stop to the situation whereby, in a housing boom, many people make more money from the rising value of their house than from their job. This distorts the whole economy, pulling money out of productive investments and into bricks and mortar, and driving up house prices to the detriment of non-property owners. We should return to treating houses as homes, not investment vehicles.

"Ordinary people" cannot afford to buy a second home or risk gambling their few savings on the Stock Market. Which planet do Spock and co. come from?

Why should my investments bought with already taxed money be taxed again?

51. At 2:01pm on 27 May 2010, sweetAnybody wrote:

"So you're saying that Pensioners should be forced to sell their houses to pay tax on the value of them. Its the most stupid idea I've seen for a while."

I'm unclear why you think Pensioners will be forced to sell their houses by this issue. Capital Gains is not liable on 'homes', i.e. houses in which people normally live (for a number of years).

===================

If you read the post I was responding to then you would realise that the original poster was suggesting Capital gains should be liable on homes.

Those who think CGT rises will hit the wealthy should think again. A well known peer & labour donor moved his assets and paid tax at 10% just before the labour government raised it to 18% (saving himself a reported £27m pounds). If they have not already done so, other wealthy people will escape any rise one way or another.
To balance the current books either taxes have to rise by 33% or spending fall by 25%. That is the mess the labour government created by increasing spending on the basis the boom years were here forever. And the spending really achieved very little (look at how they handled the Doctors contracts - doubled spend for less work). They have already taxed any soft targets (eg pension funds). So the new coalition has some tough decisions. Increasing CGT may help but I doubt it. Perhaps all public sector employees on more than average earnings should have pay and pension rights reduced (they gained substantially under labour and this would avoid need to cut numbers drastically). Perhaps VAT should go up to 25%. It needs meaningful and tough actions like these. Otherwise we can go on as we are, tinkering a little and waiting for devaluation, inflation (and interest rate rises) to have similar effect (except it hits those on lower incomes by more) - probably the only course Brown could see.

61#

What a load of old crap.

#61 Capt Price

Not sure which world you live in. The traits you describe are to be found in the Labour party and its policies, not the tory party.

You wrote "they now want your nest egg, your pension, your house, your savings and they'll get it, they'll find a way because they pay millions to lobby and the politicians will give them what they want" as a diatribe against the rich.

The whole point about tory policy is to prevent just that sort of thing happening to us, the majority of the people.

Please figure out which side you want to make your argument, and be sensible.

70#

None of our business.

36. At 1:43pm on 27 May 2010, Gerry Mandering wrote:
33# (vainly hoping for an improvenment if Brown removed)

And you were dumb enough to think it would happen overnight?
===================================

Results overnight: no

Good policies on key issues: yes

John Knowles #21

What tosh – Who was supposed to be regulating the banks eh? Was it not good old Brown

You seem to be blaming the Tories for the current global economic crisis while turning a blind blinkered red eye to Labour’s waste and constant overspending

53

wrote

and then maybe we can do away with stamp duty which unfairly penalises first time buyers?

Keep up

There is no stamp duty for first time buyers under £250K

69. At 2:40pm on 27 May 2010, colmmal wrote:

"It's not a 'fair share' at all. It takes a lot more time and effort to achieve an income of £100 000 than to earn £20 000"

I disagree. It takes some people a lifetime to reach £20 000 and this is less than soliders in the army earn. Unless of course you think that being shot at is less strenuous than moving numbers around a spreadsheet.

BTW, I earn more than £20 000 as the going rate for my profession (engineering) is higher than that, but I certainly wouldn't be claiming to have worked harder than someone my age who is cleaning hospitals for a living.

Oh dear, PhilB (post 53) rather misses the point (and in fairness the original argument about not applying CGT to main residences doesn't give a great explanation of why it's a bad idea).

The issue is that for a main residence, any increase in the cash value is an indirect consequence of buying. Taxing this increase will erode the value of the house, and leave people significantly worse off for selling in an increasing market.

Let's say you want to sell your house to move to a different part of the country, amybe to be nearer loved ones, or for work, etc (and let's ignore regional fluctuations in the cost of housing).

So, your £200k house is now worth £400k. A 40% tax charge on the gains leaves you with £320k. However, the house you want to move to is comparable to the one you just sold, and so will cost £400k. You are being penalised for moving, as you now cannot afford to buy back the house you just left! You will now need to find financing for the £80k you have had to pay in tax simply to stand still, and for £180k if you did want to get a house that is worth only £100k more than your existing one. Effectively people will have to get mortgages to pay off their tax bills. This will hugely reduce the amount of people moving house in a rising market because they simply cannot afford to do it. Of course, there could be a benefit if this means that the market remains level, and people are no longer priced out of getting on the property ladder.

Applying CGT to second homes differentiates between those who have bought to speculate on increasing property prices (driving the increase in prices and excluding many from the market) and those who simply want to move their own home to a different area, or a larger property.

What a load of idiots the Conservative right wing are turning into

Out of power for 13 years, and now moaning at every chance they get

Just shut up for a while, and let the budget happen, because you are making yourself look foolish

By the way, I voted Conservative!

Good to see others beginning to praise Osborne

I have been doing so for a long time, often the lone voice in the crowd

Incidentally, anyone with money and three brain cells, will soon work out a loophole to get round CGT

I can see what going to happen to all working class middle income earners will end up in paying more tax on their incom,life long retainment saveing.LIB/DEM policey always taxing all working people to pay for goverment waste on poblic sector,single parents,income support and housing benifit fidele.

#75 The graph at the ONS is true but misleading.

In 1997 the economy had been growing for 3 years and the Tories were not increasing expenditure at the same rate (but they were increasing it). This reduced government spending as a percentage of GDP. The Labour government kept to the same spending plans for two years - thus continuing the reduction of government spending as a percentage of GDP. Indeed for a couple of years thye government took in more money than it spent - reducing the debt.

It is only after this eriod that the Government started increasing spending faster than organic growth. Indeed as a lot of the money they spent was borrowed this money being pumped into the economy increased the GDP directly - which of course reduced the rate of increase of government spending as a percentage of GDP.

The slowness in the increase of government expenditure as a percentage of GDP is therefore the result of masking the increased borrowing (to invest in growth as G Brown said - fueling a debt-bubble everyone else now says).

I get the impression that the Hard Right on the Tory backbenches believes once again that it has some divine right to rule or even to dictate, despite the fact that the Conservatives are in a coalition. The Hard Right has a disturbingly wobbly grasp of reality.